Thu, Nov 14, 2019 - Page 12 News List

Asustek Q3 profit surges 235%

GROWTH DRIVERS:Gross margin improved in the third quarter, bolstered by new product launches and a better product portfolio, chief financial officer Nick Wu said

By Natasha Li  /  Staff reporter

Asustek Computer Inc (華碩) yesterday reported a 235 percent quarterly surge in its unaudited standalone profit for last quarter, while revenue increased 24 percent on a quarterly basis, thanks to strong sales in Europe and the Asia-Pacific.

The unaudited profit of NT$5.63 billion (US$184.6 million) for Asustek’s brand-name business translated into earnings per share of NT$7.6 for last quarter, it said.

Third-quarter revenue reached NT$88.47 billion — better than its guidance of a 20 percent increase from NT$71 billion in the second quarter, it said.

Gross margin improved from 13.8 percent in the second quarter to 15.3 percent, aided by new product launches and a better product mix, Asustek chief financial officer Nick Wu (吳長榮) told investors through an online conference.

Operating margin also rose from 1.4 percent to 4.9 percent on the back of bulk shipments leading to economies of scale, Wu said.

For this quarter, the company expects its PC sales to be flat or decline by up to 5 percent sequentially and PC peripheral products sales to drop by 5 percent as the US-China trade dispute remains unresolved, Wu said.

Intel Corp’s central processing unit (CPU) shortage is also continuing to hurt, he said.

PC sales made up 71 percent of overall revenue and peripherals contributed 29 percent, the company said.

“We expect Intel’s CPU shortage to be resolved by the first quarter next year... but in any case we have found other alternatives and solutions,” such as Advanced Micro Devices Inc’s (AMD) chips, Asustek co-chief executive Samson Hu (胡書賓) said, suggesting that Asustek might further increase the use of AMD chips next year.

As the US-China trade spat drags on, the company has prepped a relocation site in Taiwan as it ships about 20 percent of its PCs to the US, and it is reducing its inventory in China, Hu said.

The company’s mobile phone business saw net losses widen from NT$1.09 billion in the second quarter to NT$1.78 billion last quarter, but co-chief executive S.Y. Hsu (許先越) said the losses were acceptable.

“When we first launched our gaming ROG phone, we knew it was not going to be profitable immediately... We have set a goal of turning the mobile phone business around in three years,” he said.

Asustek has raised the pricing of its mobile phones, and its inventory of old models should be depleted by the second quarter of next year at the latest as sales in Brazil have been slower than expected, Hu said.

As for gaming PCs, which last quarter posted a 17 percent year-on-year increase, Hu said sales could grow by 15 to 20 percent next year as the company plans to launch new products in May and June.

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